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Can PepsiCo (PEP) Deliver Earnings Beat in Q2 Despite Odds?
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PepsiCo, Inc. (PEP - Free Report) is expected to register bottom and top-line growth when it reports second-quarter 2023 numbers on Jun 13, before the opening bell. The Zacks Consensus Estimate for second-quarter revenues is pegged at $21.6 billion, implying 6.8% growth from the year-ago quarter's reported figure.
For quarterly earnings, the Zacks Consensus Estimate is pegged at $1.95, suggesting 4.8% growth from the $1.86 reported in the prior-year quarter. The consensus mark has been unchanged in the past 30 days.
In the last reported quarter, the company reported an earnings beat of 9.5%. It has delivered an earnings surprise of 6.3%, on average, in the trailing four quarters.
PepsiCo has been benefiting from strength and resilience in its diversified portfolio, modernized supply chain, improved digital capabilities, flexible go-to-market distribution systems, and robust consumer demand trends. The company is likely to have gained from delivering convenience, variety and value proposition to customers through its brands in the to-be-reported quarter.
PEP’s second-quarter results are expected to reflect gains from improved pricing across all segments. The bottom line is likely to reflect the continued benefits of the mitigation of inflationary pressures through cost-management and revenue-management initiatives. PepsiCo is likely to have benefited from the resilience and strength in the global beverage and convenient food businesses.
Market share growth in the liquid refreshment beverage category, with share gains in the carbonated soft drinks, Ready-to-Drink Tea and water categories, is likely to have aided the improvement in the beverage category. Investments in innovation, pricing and execution also bode well.
The company’s food business has been gaining from revenue growth across core brands like Doritos, Lay’s, Ruffles, Tostitos and Cheetos. The Quaker business has been benefiting from market share gains in the rice and pasta, lite snacks, ready-to-eat cereal, and snack bar categories, as it has been capitalizing on the elevated demand for tasty products that deliver convenience and value.
However, PepsiCo is expected to have witnessed margin pressures in the second quarter, driven by the impacts of supply-chain disruptions and inflationary labor, transportation, and commodity costs. Adverse currency rates are also likely to have been headwinds.
Increased advertising and marketing expenses, along with additional investments to build digital capabilities and integrate purpose throughout the company, are likely to have weighed on margins in the to-be-reported quarter.
Zacks Model
Our proven model does not conclusively predict an earnings beat for PepsiCo this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
PepsiCo has a Zacks Rank #3 and an Earnings ESP of 0.00%.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Philip Morris International (PM - Free Report) currently has an Earnings ESP of +0.65% and a Zacks Rank #3. The company is expected to register top-line growth when it reports its second-quarter 2023 numbers. The Zacks Consensus Estimate for PM’s quarterly revenues is pegged at $8.7 billion, which suggests growth of 10.9% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for Philip Morris’ quarterly earnings has moved down by a penny in the past seven days to $1.47 per share. The estimate suggests a 0.7% decline from the year-ago reported number. PM has delivered an earnings beat of 10.4%, on average, in the trailing four quarters.
Archer Daniels Midland (ADM - Free Report) currently has an Earnings ESP of +5.34% and a Zacks Rank #3. ADM is anticipated to register top and bottom-line declines when it reports second-quarter 2023 results. The Zacks Consensus Estimate for Archer Daniels’ quarterly revenues is pegged at $25.1 billion, indicating a decline of 8.1% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Archer Daniels’ bottom line has moved up by a penny in the past seven days to $1.56 per share. However, the consensus estimate suggests a decline of 27.4% from the prior-year quarter’s reported figure. ADM has delivered an earnings beat of 23.4%, on average, in the trailing four quarters.
Kraft Heinz Company (KHC - Free Report) has an Earnings ESP of +1.00% and a Zacks Rank #3 at present. KHC is likely to register top and bottom-line growth when it releases second-quarter 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $6.8 billion, which suggests growth of 4.1% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Kraft Heinz’s quarterly earnings has been unchanged in the past 30 days at 75 cents per share, suggesting growth of 7.1% from the year-ago quarter’s reported number. KHC has delivered an earnings surprise of 10.7%, on average, in the trailing four quarters.
Image: Bigstock
Can PepsiCo (PEP) Deliver Earnings Beat in Q2 Despite Odds?
PepsiCo, Inc. (PEP - Free Report) is expected to register bottom and top-line growth when it reports second-quarter 2023 numbers on Jun 13, before the opening bell. The Zacks Consensus Estimate for second-quarter revenues is pegged at $21.6 billion, implying 6.8% growth from the year-ago quarter's reported figure.
For quarterly earnings, the Zacks Consensus Estimate is pegged at $1.95, suggesting 4.8% growth from the $1.86 reported in the prior-year quarter. The consensus mark has been unchanged in the past 30 days.
In the last reported quarter, the company reported an earnings beat of 9.5%. It has delivered an earnings surprise of 6.3%, on average, in the trailing four quarters.
PepsiCo, Inc. Price and EPS Surprise
PepsiCo, Inc. price-eps-surprise | PepsiCo, Inc. Quote
Key Factors to Note
PepsiCo has been benefiting from strength and resilience in its diversified portfolio, modernized supply chain, improved digital capabilities, flexible go-to-market distribution systems, and robust consumer demand trends. The company is likely to have gained from delivering convenience, variety and value proposition to customers through its brands in the to-be-reported quarter.
PEP’s second-quarter results are expected to reflect gains from improved pricing across all segments. The bottom line is likely to reflect the continued benefits of the mitigation of inflationary pressures through cost-management and revenue-management initiatives. PepsiCo is likely to have benefited from the resilience and strength in the global beverage and convenient food businesses.
Market share growth in the liquid refreshment beverage category, with share gains in the carbonated soft drinks, Ready-to-Drink Tea and water categories, is likely to have aided the improvement in the beverage category. Investments in innovation, pricing and execution also bode well.
The company’s food business has been gaining from revenue growth across core brands like Doritos, Lay’s, Ruffles, Tostitos and Cheetos. The Quaker business has been benefiting from market share gains in the rice and pasta, lite snacks, ready-to-eat cereal, and snack bar categories, as it has been capitalizing on the elevated demand for tasty products that deliver convenience and value.
However, PepsiCo is expected to have witnessed margin pressures in the second quarter, driven by the impacts of supply-chain disruptions and inflationary labor, transportation, and commodity costs. Adverse currency rates are also likely to have been headwinds.
Increased advertising and marketing expenses, along with additional investments to build digital capabilities and integrate purpose throughout the company, are likely to have weighed on margins in the to-be-reported quarter.
Zacks Model
Our proven model does not conclusively predict an earnings beat for PepsiCo this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
PepsiCo has a Zacks Rank #3 and an Earnings ESP of 0.00%.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Philip Morris International (PM - Free Report) currently has an Earnings ESP of +0.65% and a Zacks Rank #3. The company is expected to register top-line growth when it reports its second-quarter 2023 numbers. The Zacks Consensus Estimate for PM’s quarterly revenues is pegged at $8.7 billion, which suggests growth of 10.9% from the prior-year quarter’s reported figure.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Philip Morris’ quarterly earnings has moved down by a penny in the past seven days to $1.47 per share. The estimate suggests a 0.7% decline from the year-ago reported number. PM has delivered an earnings beat of 10.4%, on average, in the trailing four quarters.
Archer Daniels Midland (ADM - Free Report) currently has an Earnings ESP of +5.34% and a Zacks Rank #3. ADM is anticipated to register top and bottom-line declines when it reports second-quarter 2023 results. The Zacks Consensus Estimate for Archer Daniels’ quarterly revenues is pegged at $25.1 billion, indicating a decline of 8.1% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Archer Daniels’ bottom line has moved up by a penny in the past seven days to $1.56 per share. However, the consensus estimate suggests a decline of 27.4% from the prior-year quarter’s reported figure. ADM has delivered an earnings beat of 23.4%, on average, in the trailing four quarters.
Kraft Heinz Company (KHC - Free Report) has an Earnings ESP of +1.00% and a Zacks Rank #3 at present. KHC is likely to register top and bottom-line growth when it releases second-quarter 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $6.8 billion, which suggests growth of 4.1% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Kraft Heinz’s quarterly earnings has been unchanged in the past 30 days at 75 cents per share, suggesting growth of 7.1% from the year-ago quarter’s reported number. KHC has delivered an earnings surprise of 10.7%, on average, in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.